The Evolution of Aggregate Stock Ownership - A Unified Explanation
State University of New York at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Joshua D. Spizman
Loyola Marymount University - Department of Finance and Computer Information Systems
Ilya A. Strebulaev
Stanford University - Graduate School of Business; National Bureau of Economic Research
CEPR Discussion Paper No. DP7356
Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside a pension plan. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices.
Number of Pages in PDF File: 59
Keywords: Bracket creep, capital gains tax, Income tax, Inflation, Pension funds, stock ownership
JEL Classification: G10, G20, H22, H30working papers series
Date posted: August 26, 2009
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